States and counties have so little money, that they’re turning their asphalt roads into gravel roads when repair time comes. If only there were some entity with lots of money and ready access to capital markets at cheap interest rates that could finance such infrastructure investments, which would provide both an immediate return and a long-term one. But where can such an entity be found?

Daniel Gross attempts to reassure us about the economy…by providing reasons to be pessimistic about the economy.

On the high seas, full speed ahead is being replaced by slow and steady…Eager to cut fuel costs, ocean shipping lines have ordered their sea captains to throttle back the engines for what is quaintly known in the industry as "slow steaming." In some cases, freighters are taking as many as 15 days to make a Pacific crossing that used to take 11 days.
…
Copenhagen-based A.P. Moeller-Maersk, the world's biggest ocean cargo line, is a major convert. Maersk, which has a fleet bigger than the U.S. Navy, swung to a $639-million profit in the first three months of the year, the most recent quarter reported, from a $373-million loss in the same period last year. The sharp improvement came with the help of a 9% saving in fuel consumption because Maersk's ships slowed down.

Since more of the world is adopting Toyota/Wal-Mart standards of supply chain management—i.e. the “just in time” philosophy—slowing down the shipping part of the equation may prove deletrious.

Why the Catalans were so happy to ban bullfighting (they wanted to show up Madrid).

Unreal story from an old Vanity Fair about a Brazilian gang which started a rebellion in Sao Paolo…from prison:

… on the afternoon of Friday, May 12, 2006, São Paulo came under a violent and coordinated attack. The attackers moved on foot, and by car and motorbike. They were not rioters, revolutionaries, or the graduates of terrorist camps. They were anonymous young men and women, dressed in ordinary clothes, unidentifiable in advance, and indistinguishable afterward. Wielding pistols, automatic rifles, and firebombs, they emerged from within the city, struck fast, and vanished on the spot. Their acts were criminal, but the attackers did not loot, rob, or steal. They burned buses, banks, and public buildings, and went hard after the forces of order—gunning down the police in their neighborhood posts, in their homes, and on the streets. The police shot back and killed some people, but the others did not stop. They were like ghosts. On an animated plot of São Paulo their presence would have seemed like pinpoint flashes of light sparkling at random far and wide. The sparkling was slow, but word spread quickly, and traffic snarled as citizens tried to rush home. After they settled behind locked doors, they did not dare to venture out. Restaurants and shops were closed. The boulevards lay lit and abandoned. On television came news that the attacks were the work of a prison gang, half forgotten but widely known, called Primeiro Comando da Capital, or P.C.C., the First Command of the Capital. Across the state 73 prisons rose in synchronous rebellion. This caused less concern than one might expect, in part because prison riots are common in Brazil, and are routinely if sometimes brutally contained. But the attacks against the city were something else, and the government had no idea how to respond.

The NYT has also published an incredibly good article about overdoses in radiation from CT scans that simply has to be read to be believed. This post is something of a bifurcated one: there are two separate goals I’m after. The first is the health care system ribbing that you’re probably familiar with if you’ve read this blog for a fairly long period of time; the second purpose is a little bit more general about technology. I think the division will be fairly clear when it occurs.

Let’s start with the first purpose, which also serves as a convenient set-up for the post in general. Apparently technicians of CT scanners tend to use too much radiation in their scans of the brain for a number of different reasons (of which a big part is technology, which as stated previously will be covered later), but basically comes down to the fact that more radiation is perceived to produce a better, cleaner image. To the excerpts!:

Even when done properly, CT brain perfusion scans deliver a large dose of radiation — the equivalent of about 200 X-rays of the skull. But there are no hard standards for how much radiation is too much. The overdoses highlight how little some in the medical profession understand about the operation of these scanning devices and the nature of radiation injuries, as well as the loose requirements for reporting accidents when they are detected.

For a year or more, doctors and hospitals failed to detect the overdoses even though patients continued to report distinctive patterns of hair loss that matched where they had been radiated. After the Food and Drug Administration issued a nationwide alert asking hospitals to check their radiation output on these tests, a few hospitals continued to overdose patients for weeks and in some cases months afterward, according to records and interviews.

Note, by the way, that many of these hospitals seem to be reputable/tony ones, particularly in Southern California. Which is something of a tip-off to two general problems in our health care system: first, the lack of comparative effectiveness research; second, fancy gadget-ism.

It’s mind-boggling that doctors don’t know how much radiation is the proper amount to administer. Given that radiation is generally accepted to cause some nasty things—you can’t even call them side effects; they’re definitely features—you’d have to term the failure of doctors to figure out what the proper standards of administering radiation to be something close to professional malpractice. So of course this is a task for comparative research, as it is for so much of the health care system: the fact is that medicine has a lot more in common with economics in being a rather loose science than either would like to admit. I mean medicine in practice, of course. Consider drug trials: they’re done with patients who receive cash incentives to follow their regimen, with tests and monitoring to make sure they follow their regimens, and said patients must fit a certain body type in order for their regimens. Now, in the latter case, you can’t say this is necessarily wrong—but it does show that medicine in practice is nothing close to a settled practice. There’s not a lot of certainty of best practices for a wide range of medicine, and in many cases of the best practices being known, the uptake is not exactly as fast or as broad as outside observers would expect or want (I’m thinking here of post-surgical infections in particular.) (A further note: hand-in-hand with figuring out and implementing best practices is not doing unnecessary interventions, particularly pressing in this case since we’re dealing with radiation and all. Which makes the final quotation in the article from a professor at UCSF particularly biting:

“These tests have really high doses,” she said. “And there’s no system for figuring out who is getting them and why they are getting them.”

Reducing mistakes is important, but the bigger challenge, she said, is to eliminate unnecessary testing.

“Utilization has increased dramatically, and as a society we have not had the time to respond.”

Again, this is our screwed-up health care system.)

Then there’s the fancy-gadgetism aspect here, and that’s another general problem. You have a system that militates for getting the newest, fanciest gadget whenever possible irrespective of performance (often unsubstantiated) and cost. Now, at issue with this particular case is a particular scanner from GE Healthcare which, ah, does not feature the best HCI:

Normally, the more radiation a CT scan uses, the better the image. But amid concerns that patients are getting more radiation than necessary, the medical community has embraced the idea of using only enough to obtain an image sufficient for diagnosis.

To do that, GE offers a feature on its CT scanner that can automatically adjust the dose according to a patient’s size and body part. It is, a GE manual says, “a technical innovation that significantly reduces radiation dose.”

At Cedars-Sinai and Glendale Adventist, technicians used the automatic feature — rather than a fixed, predetermined radiation level — for their brain perfusion scans.…But a surprise awaited them: when used with certain machine settings that govern image clarity, the automatic feature did not reduce the dose — it raised it.

And what’s G.E.’s response?:

GE says the hospitals should have known how to safely use the automatic feature. Besides, GE said, the feature had “limited utility” for a perfusion scan because the test targets one specific area of the brain, rather than body parts of varying thickness. In addition, experts say high-clarity images are not needed to track blood flow in the brain.…GE further faulted hospital technologists for failing to notice dosing levels on their treatment screens.

G.E.’s position is both perfectly reasonable and utterly misguided. Reasonable, in that what G.E. is asking these technologists to exercise is their common sense. Common sense would indicate: hey, make sure you’re checking up on the machine. It’s just a machine, after all. Utterly misguided, of course, is merely hinted by calling the feature “automatic.”

“Automatic” is how we like technology, as well we should: automatic means there is no common sense. The old saw holds that common sense isn’t so common after all, and it’s an old saw because it’s true. If you’d like, substitute “independent judgment” for “common sense” and you can grasp the point. In many ways—perhaps most ways, when compared to our ancestors—our lives have removed a good deal of the common sense/independent judgment questions in our lives. This, incidentally, appears to be good thing: an assembly line requires little independent judgment. It’s soul-crushingly boring, but it’s an excellent way of assembling things. (Other examples: anything using dynamic pricing, e.g. electricity in a smart grid, airline tickets, etc.)

Unfortunately, G.E. made a technology that promised to take the common sense out of a portion of medicine, and didn’t. That’s a huge problem, as you can tell by reading the article in full—I’ve omitted the personal stories. It’s unlikely that medicine will be conquered by technology that obviates independent judgment—though, were it, we’d probably have a cheaper, more effective health care system—because the human body is too complex and too varied to be so conquered. This should present a problem for a fancy gadget makers, but business-wise they seem to be doing O.K., so I suppose the problem has been foisted on us.

There was once a very odd commercial: Avis’s, which declared, “We’re number two, but we’ll try harder.” A discordant sentiment in this country, at least, where the quest to be number one is pretty much clichéd by now. The commercial was, I believe, withdrawn for that very reason. It’s hard not to view this New York Times article chastising Italy’s failure to adapt to the modern world in that light.

On one hand, it makes several valid points about corruption:

“This is a country with a lot of rents,” says Professor Giavazzi, sitting in his office one recent afternoon, using the economists’ term for excess profits that flow to a business because of a lack of competition. “You need a notary public, it’s like 1,000 euros before you even open your mouth. If you’re a notary public in this country, you live like a king.”

For Mr. Barbera, as is true with every entrepreneur here, the prevalence and power of Italy’s guilds explains much of what is driving up costs. He says he must overspend for accountants, lawyers, truckers and other members of guilds on a list that goes on and on: “Everything has a tariff, and you have to pay.”

The part of the article focusing on corruption and other unreasonable rigidities is well-taken and true in any environment, not merely the environments that are aggressively seeking to be number one always. It’s the other part of the article—a part of the article that somewhat bizarrely insists it’s a part of the same general malaise—that betrays the number-one-bias.

The other part of the article focuses on the business owner named Luciano Barbera. Barbera is a clothier who makes ultra-high-end fabric for designer houses; in the NYT’s dispassionate editorial voice, Barbera’s unwillingness to try to be number one is apparently a fault:

The suspicion of Italians when it comes to extra-familial institutions explains why many here care more about protecting what they have than enhancing their wealth. Most Italians live less than a mile or two from their parents and stay there, often for financial benefits like cash and in-kind services like day care. It’s an insularity that runs all the way up to the corporate suites. The first goal of many entrepreneurs here isn’t growth, so much as keeping the business in the family. For a company to really expand, it needs capital, but that means giving up at least some control. So thousands of companies here remain stubbornly small — all of which means Italy is a haven for artisans but is in a lousy position to play the global domination game.

But of course it can be awfully profitable to be an artisan and awfully unprofitable to be number one: the question isn’t about being the biggest, the question is about being the most profitable, in cold business terms. Then there’s the fact that for many of these artisans, it may simply be more interesting to be a small firm with an insistence on high quality than to try (and perhaps fail) to be a larger one. The article makes some handwaving attempts at acknowledging this relatively spiritual truth—it says that small artisanal business make cities more quaint and interesting (which is duh), but ultimately seems to believe that this is an unfortunate relic of the past. But riddle yourself this: what parts of New York City are more interesting—Times Square or Greenwich Village? I bet I know what your answer is. And these days it’s very important to be an interesting place to live, as Richard Florida or any Richard Florida reader will tell you.

Earlier in the article, the writer is at great pains to make Barbera seem quixotic and strange, like Ahab after Moby Dick: his white whale is the “Made in Italy” label. Apparently high fashion in Italy previous to a few years ago didn’t have a “Made in Italy” label; a law remedied that by spelling out requirements for attaching such a label. However, as Barbera points out, the label’s requirements seem rather lax: you only have to do a limited number of steps in the assembly of an article of clothing in order to qualify for the label.

This may seem like a rather minor point—and the writer seems to treat it as such, as an obsession of a businessman with otherwise big problems (this is not unfair: Barbera does have so much debt he would’ve filed for Chapter 11 had he been incorporated in the U.S.), but in fact it’s not minor. Barbera has an excellent point here:

“At a certain point, he could have gone to China and opened factories there,” says Mr. Pearlstein, who is now retired. “But mentally, I don’t think there was any way he could do that because he has always been so committed to his hands-on methods.”

Mr. Barbera says he has no qualms about globalization. In his opinion, Italy can’t compete when it comes to low-skill labor and shouldn’t try.

“But I say that Italy, with its 20 million workers, can be the boutique of the world,” he says. That will never happen, he adds, if designers can buy fabric outside Italy and tag it “Made in Italy.”

Now, it’s true that not everyone can produce high-quality, high-value, high-premium stuff. In fact, at any given moment, the number who can hit that trifecta is a very small portion of the world. But at the same time it’s not exactly insane to think that Italy is well-positioned to be the fashion boutique of the world. Or, for that matter, the wine and food capital of the world. Or, indeed, the fine car capital of the world. And so on: various Italian firms have a high degree of brand recognition for people. But that brand is dependent, at least a little bit, on actually being a high-quality product: on your clothing actually being high-quality and well-made (the kind of well-made that, say, you could still wear the same pair of dress shoes for twenty years and be no worse for wear). And since that’s actually the case, you need to set standards: standards such that the words “Made in Italy” actually mean that and are a brand in on itself. So while Barbera may have more immediate problems than the requirements of said label, he makes a very salient point.

The world is often unkind to artisans. The monks who used to make those beautiful books—with the calligraphy and the pictures—well, they’d never survive today. But during that time period when you can be an artisan and survive that way, that’s a good life and potentially a profitable one. Saying artisanship is a barrier to further economic growth is wrong, and moreover it misses the point: economic growth for its own sake is silly; we’re growing because we want to live more interesting, varied lives. Not realizing that, I think, is something of a failure of imagination: failing to imagine a universe in which it’s OK to be number two and never even try to be number one.

I’m more worried—or interested, or intrigued, I suppose—about the things we know how to do better but don’t than the things we’ve yet to know how to do. Whenever an economic optimist makes the case for economic optimism, we’re often treated to wondrous sermons about the latter: who knows what kind of cool inventions or innovations are just around the corner? We could finally be traveling around in jetpacks next year for all we know.

And obviously that’s all well and true. There’s a lot of stuff we don’t know how to do, but think is possible, that would be pretty excellent for everybody concerned if we were to actually figure out how to do it. Curing cancer, or inventing a cost-competitive green fuel…etc. etc.

But there’s so much stuff that people know perfectly well how to do better but for whatever reason don’t do. I was thinking about a couple of the articles I posted earlier on this very subject: namely, the cheap tractor coming to India, and Chuck Grassley sending that letter to the artificial joints maker about their faulty joints (with the accompanying point that we need to track joint replacements in order to determine the longevity and effectiveness of various brands of artificial joints.)

Neither of these things represents an unimaginable increase in the skills and potential of human beings. The tractor, after all, is a pretty familiar implement for people; introducing it to India, however, promises an increase in agricultural productivity for a country that has often had problems feeding all of its people. With artificial joints—again, it’s not as if the idea of tracking the effectiveness and longevity of various types of artificial joints is either out of left field or even undone. The Europeans do it as do the Australians. It’s just that we don’t do it, at a cost of human welfare and unnecessary dollars spent.

And there are tons of other examples of this, and it just reinforces the idea that part of our problem isn’t the stuff we don’t know how to do, but the stuff we do know how to do.

Friday, July 30, 2010

Relatively few progressives seem to recognize that it’s always been the case that major periods of substantive reform go hand-in-hand with episodes of procedural reform. Important substantive reforms, by definition, threaten influential actors in the system. Those actors, not being idiots, seek to exploit procedural elements of the system to frustrate reform. Successful reformers need to find ways to frustrate these tactics of frustration.

The Charlotte, N.C., lender this week cut the average rate on its five-year CD by 0.50 percentage point, to 1.75% from 2.25%. Its four-year CD went from an average of 1.75% to 1.45%, and its three-year CD dropped to an average of 1.1% from 1.5%.

Speaking of big banks, apparently they act the same way in Great Britain:

A range of questionable hidden fees and levies are being deducted from investments, making it difficult for a typical saver to make money from the stock market. Britain’s eight million investors are losing an average of £800 a year each to the hidden levies.

An investor putting £50,000 into a fund providing typical returns over 25 years would lose out on £108,000 because of unnecessary charges, said David Norman, a former chief executive of Credit Suisse Asset Management.

A top Senate Republican is asking the nation’s biggest maker of artificial hips and knees to disclose information about how it handles complaints about possible product flaws from its medical consultants.
…
Orthopedic implants, given the aging population, are among the fastest-growing category of medical implants and a major expense for taxpayer programs like Medicare.

However, while some countries use patient databases to track the performance of artificial hips and knees, the United States, which is the world’s largest user of such devices, does not.

Also, while makers of another widely used type of medical implant — heart devices like defibrillators — use panels of outside medical experts to review product complaints, orthopedic implant producers do not.

Again, we need a database for this sort of thing.

More on the overpaid politicians of Bell, California: apparently they charge their residents the 2nd highest property tax rates of all of Los Angeles’s counties. It looks more and more like their own petty corruption-based fiefdom.

One list of the greatest magazine articles ever. Joan Didion is very much underrepresented on the list.

The retailer's decision to introduce a new, cheaper Kindle, just weeks after slashing the price of the existing version of the device, confirms that once again Amazon is taking the long view in trying to boost its share of a market—this time, e-books. Just a week ago, Amazon surprised Wall Street with lower-than-expected second-quarter operating margins, the result of increased investment in its businesses, including marketing costs for the Kindle.

At $139, the new device is about a third the price of the original Kindle and nearly half what the second iteration was selling for just five weeks ago. That aggressive new price should entice more people to take the e-reading plunge. That doesn't mean the Kindle will become "mass market," as Amazon suggests; an occasional book reader is arguably no more likely to pay $139 for an e-reader than $259, but that isn't necessarily a problem.
…
Amazon's price-cutting won't be cheap. The company said last year that its Kindle manufacturing costs were "significantly higher" than an estimate from iSuppli of $185.49. Costs likely have come down since then, and not offering cell-network access reduces costs as well. Still, it is a good bet the company is losing money at $139 a unit. One silver lining from the Apple threat is that the price rises pushed though on e-books should have improved Amazon's margins there.

Looks like they’re going to corner the market then destroy the publishers entirely.

IMF believes the U.S. financial system is still at risk. Isn’t it always at risk?

Fuel consumption is a major environmental concern, not to mention a financial one for airlines, typically consuming roughly one third of their budgets, according to the Air Transport Association trade group. The Federal Aviation Administration (FAA) estimates that by 2030, the U.S. fleet of commercial aircraft will consume more than 110 billion liters of fuel, up from about 68 billion liters this year, and nearly 160 million people will be flying on U.S. planes compared with the current 70.7 million, according to the agency. For this reason the FAA in June announced its own $125 million Continuous Lower Energy, Emissions and Noise (CLEEN) program to promote environmentally friendlier flight by modifying existing designs, as opposed to NASA's strategy to solicit designs for entirely new aircraft.
…
Aircraft-makers have been conservative about changes they make to the basic design of their planes over the past several decades because major redesigns are an expensive gamble. Designing and building a new model from the rivets up is a $10-billion proposition, says Mark Drela, professor of fluid dynamics in the M.I.T. Department of Aeronautics and Astronautics, and a leader of the university's N+3 team. "You literally bet the company on almost every new plane," he adds. Drela's estimate may be conservative, given the notorious cost overruns in the airline industry.
…
The idea behind N+3 is to rethink the possibilities. One vehicle proposed by Drela's group, which included researchers from Pratt & Whitney and Aurora Flight Sciences resembles a bulbous, flat-topped baguette capable of carrying 180 passengers. A cross section of the fuselage, which is two merged cylinders, looks like fused soap bubbles—earning it the nickname the "double bubble." Conspicuously absent are engines hanging from the wings—they are mounted instead between twin tail struts, where they provide more efficient thrust—and the wings themselves are longer, thinner and more delicate-looking than those on modern jetliners like the Boeing 737 that the "double bubble" is intended to replace. M.I.T. also submitted a design for a larger plane for international travel capable of ferrying 350 passengers.

1. Why, so frequently, are the freestyles or remixes or other teasers so much better—more teasing—than the album itself? Examples:

Theory: the fault is shared by both audiences and artists. Artists want to intrigue with the free stuff because they know that once you’ve bought album, you’re hooked. So in some ways releasing a song with a higher average quality than the album it’s promoting is positive for the artist. On the audience side, there’s the fallacy of false projection: everyone imagines the best-case scenario and fills in the blanks accordingly.

2. Is there a better singer of hooks than Rihanna? Besides “Love The Way You Lie” (still an incredibly strange song), she’s absolutely made several songs fairly recently. To wit:

(A further note: the most popular search for the latter song after the title? “Live your life rihanna.” Which proves the point, doesn’t it?)

The WSJ has yet another article which can be interpreted in many different ways, depending on how you feel about the economy. It’s an article about corporate bonds: they’re going cheap (in interest rate terms for the borrower.) Here’s the facts:

This month has been the busiest July on record for sales by U.S. companies with junk-credit ratings. Asia's debt market is on pace for a record year, and European companies are also raising money apace.

The low borrowing costs are the culmination of an unprecedented bond-market rally that began in the depths of the credit crisis in late 2008 and early 2009 and has defied every prediction that it would soon run out of steam. But individual and professional investors continue to plow money into the bond market, giving companies a constant source of funds to tap.

Here’s the Journal’s interpretation:

But for now, many of the conditions that got bonds rolling in the first place still hold sway. The Federal Reserve has short-term interest rates near zero, investors are leery of stocks, and the economic outlook is too sluggish to spark a robust stock boom but not so bad that it causes companies to default.

The question, however, is what exactly they’re using the money for. As has been discussed in much detail, with much speculation as to the cause, companies are hoarding cash. The Journal mentions this in passing, noting that much of the bond issuance is merely refinancing old debt. This, of course, is bad.

I view the large investments in corporate and government bonds as a part of that old flight to safety story. Here’s my favorite colorful quote on the matter:

"I looked at McDonald's debt and felt marginally the same as if I'd eaten five Big Macs in a row," said Jason Brady, portfolio manager at Thornburg Investment Management in Santa Fe. "It's a great company, but I don't need to own a low-A-rated corporate risk at 3.5%."

Again, that flight to safety story: investors need some sort of somewhat safe return, and I guess low-A-rated risk is safe enough. What this indicates is that there are large pools of money looking for a safe home to be invested in productive purposes. As it happens, the market does regard one home in particular to be safe: the U.S. government. And—even more coincidentally—there are plenty of productive purposes the U.S. government could use this money as an investment with long-term returns for: I’m sure you can use your imagination. Unfortunately, it seems that your imagination will never be translated into reality: not with the U.S. government financing state aid…with cuts to food stamps. This, apparently, is the sensible act of a wise leadership.

Thursday, July 29, 2010

John Cassidy has some good points about that magic-kindergarten-teachers study I linked to earlier:

Yes, good teaching is important. But the key policy issue is raising average teaching standards throughout the education system, not simply seeking out and rewarding exceptional kindergartens. In affluent areas of New York City, parents’ efforts to capture every possible educational advantage for their young children have already reached absurd levels. If this new research is accepted as gospel, I can already see admissions officers at snooty private schools waving it in the air and saying to parents: ‘Look, I told you our $30,000 fees were justified. Where else can you find a kindergarten teacher with a Princeton Ph.D. in Victorian literature?” (In the public sector, meanwhile, the teachers’ unions will cite the new research in support of higher pay claims, ignoring the fact that it doesn’t even address the issue of whether higher pay leads to better-quality teaching.)

Cap-and-trade is maybe, possibly, if things work out right, coming to the Western U.S.

Apparently in response to that prison-guards-freeing-the-prisoners story, four Mexican journalists have been kidnapped.

Chinese investment in Africa proceeds apace: Rio Tinto and China team up for an investment in Guinea. Guess there’s no hard feelings between Rio Tinto and China. Anything for a buck, I suppose. And how about some scary China environment statistics?:

The ministry said the number of accidents fouling the air and water doubled during the first half of 2010, with an average of 10 each month. The report also found that more than a quarter of the country’s rivers, lakes and streams were too contaminated to be used for drinking water. Acid rain, it added, has become a problem in nearly 200 of the 440 cities it monitored.

Mahindra & Mahindra Ltd., India’s largest tractor maker, will roll out its cheapest model in more parts of the country as farmers switch to machines from oxen.

Mahindra may sell as many as 15,000 units of the 15- horsepower tractor annually by March 2014, Bishwambhar Mishra, head of the company’s Swaraj tractor unit, said in a phone interview yesterday from Chandigarh, India. The 165,000-rupee ($3,500) model was unveiled in October in one state, where 1,000 units were sold through March.
…
India has a low rate of farm mechanization, with 13 tractors for every 1,000 hectares, less than half the U.S. rate, ICRA Ltd. said in May. Almost half the 439,600 tractors sold in India in the year ended March were in the 31 horsepower to 40 horsepower range, it said, putting them beyond the reach of small farmers.

Pretty incredible that large portions of the world are still relying on oxen to plough their farms; it’s factoids like this that convince me of this fact: if we don’t utterly screw up, there are some exciting developments to improve everyone’s lives coming up in the next ten to twenty years or so.

I’ve spent some time thinking about Farhad Manjoo’s essay about the tension between Wikileaks’s radical transparency and its promise of anonymity to the leakers that leak to it, and I’ve finally come up with the reasons I think it’s wrong.

Let’s start with the nub of Manjoo’s article. After pointing out that Wikileaks’s anonymity policy is so strong that even Wikileaks doesn’t know who’s submitting documents to them, Manjoo writes:

…the fact that the leaker wants to minimize harm suggests that he, like most whistle-blowers, has some sort of agenda. That agenda is a part of the story, and it could provide valuable context for all of this data. If the source wants the United States to end the war in Afghanistan, we would look at the documents in one way; if he simply wants the U.S. to prosecute the war differently—perhaps, for instance, by sending more troops—we would see the documents in an entirely new context. Because we know nothing about the source, we don't know the story he's trying to tell in releasing these—and not other—documents covering the war.

Also, isn't it at least conceivable that WikiLeaks' source altered these documents? Nobody in government has questioned the authenticity of the trove—in fact, in condemning their publication, the Obama administration seems to be confirming that the reports are real. Nobody in the media seems to be questioning whether WikiLeaks' stash is authentic either. This is partly because the documents look authentic—they correspond to known times and places of U.S. troops, and comment on real participants in the war in ways that fit a pattern with well-known events. But that only tells us that the documents aren't complete forgeries. There are tens of thousands of reports here, each extremely dense and technical. How do we know that the source didn't add, hide, or in some other way change a number or a sentence here and there in order to paint either a more positive or negative picture of the war?

Manjoo’s argument is very well-built, which is what necessitated so much time thinking about the whole thing, as something struck me wrong about the argument while I was reading it, but it wasn’t obvious to me. What’s wrong about the argument, I think, comes down to two critical distinctions: the purpose of transparency and the difference between a story and an argument. I’ll tackle each in turn.

Why, exactly, do we prize transparency in the first place? Transparency has been such a buzzword these days that we’ve forgotten, to a certain extent, the purpose of wanting it in the first place. Usually, when transparency is invoked, we mean it simply as: we want more information. Yet the dangers of too much information are nearly as great as the dangers of too little. So one key, then, in thinking about transparency is how to see the right information, rather than all of the information or the wrong information. It’s a time-honored method of obfuscation, in fact, to pretend to be transparent by simply releasing every piece of vaguely relevant information in response to an investigation (I seem to recall a story about a congressional investigation receiving receipts for takeout as part of a document dump) when in fact this is nothing of the sort. Part of the problem here is the metaphor being used. Transparency mentally makes us think of, say, an artisan at work: perhaps an open-air kitchen or something like that. That is, all of the relevant information can be seen. But information these days doesn’t really work like that; in fact, much of the time we don’t really realize which information is valuable until after the fact.

Transparency, then, is the wrong word to convey what we want from transparency. What we want is to be informed about the activities of the powerful; that their actions proceed from some just code, and that their actions aren’t arbitrary. We want, in effect, monitoring.

At the moment, then, this is where Manjoo’s argument has a flaw. Because the leakers to Wikileaks are not powerful; were they not leakers, we would be utterly uninterested in their existence, unlike (to use Manjoo’s later example) those politicians or bureaucrats who cynically use leaks to manipulate the media into reporting their favored story. There is, at the moment, an imbalance of power between the Wikileaks leakers and the “sources close to the administration.” With Wikileaks’s growing prominence, however, more and more sources will begin to use the service, of which some of whom will, by dint of the odds, be powerful. I don’t think there’s a satisfactory way of curing this problem, aside from Wikileaks keeping a close eye on the documents to make sure they are not forged, improperly tampered, or something of that sort.

Because the other benefit to Wikileaks’s anonymity is the distinction between an argument and a story. It’s telling that Manjoo uses the word “story” to describe what he thinks the benefit would be behind knowing the identity of the leaker in question. Because it would, undoubtedly, make a great story. We obsessed about one particular anonymous leaker, Deep Throat, for years, and justly so: it was a great story. But what it wasn’t, ultimately, was an argument.

Let’s consider Deep Throat briefly: Deep Throat was the unofficial alias of one Mark Felt, a conservative high-up FBI official who, partly from principle and partly from pique at Nixon attacking his favored institution, the FBI, decided to leak to Woodward and Bernstein…and you know how the rest of the story goes, don’t you? That you know how the rest of the story goes proves that the facts stood on their own: it’s interesting that Felt had that background, but ultimately it’s the facts that matter. Similarly, whomever the leakers are to Wikileaks is an interesting story, but ultimately the facts stand on their own, because it’s an argument.

There’s a very strong presumption against ad hominem arguments in theory, but not so much in practice, where we regularly impugn opponent’s honor, credibility and trustworthiness. This is largely impossible with Wikileaks: you can only argue with the documents themselves; there are no distractions. We don’t know if the leaker of the Afghanistan war logs is an alcoholic, an incompetent, a war hero, a general or a buck private: we don’t know, and it’s wonderful. Because now all we have to use are the facts, and in an argument, that’s what matters.

“Rap is a young man’s game,” Jay-Z helpfully informed us. That he proceeded to disregard his own advice and come out of retirement (and make one to two really good songs per album) is immaterial: rap does seem to be a young man’s game. Or, if rap has the possibility of being more than a young man’s game, the old guys haven’t exactly figured it out.

I suppose the latest proof of this is Eminem, whose latest album, Recovery is like an aging athlete’s last season: Eminem knows all of the moves he wants to make, has a certain comprehension of how he wants to do it…but it all falls apart in the execution. Old age, you might say. So a song like W.T.P., centering around a white trash party, is more boring than shocking. Eminem has always thrived on viciousness: lewd, shocking content married to an aggressive, rat-a-tat flow. He shows glimpses of that ability in the album, but only glimpses: either the flow is good and the beats terrible, or the beats are good and the flow terrible. Only two songs released around the general publicity for the album really come together in the way you’d want (warning: very NSFW.)

One other song sounds like it comes together—you’ve probably heard it, “Love To Hear You Lie,” but ultimately the unacknowledged context of the song makes it far too weird: namely, Rihanna is singing the hook to a song about what seems to be about a lovers’ spat gone physical, which, uh, is strange given the Chris Brown-Rihanna thing. And no one is commenting about this strangeness as far as I can tell. (It also features the terrible lyric “Maybe that’s what happens when a tornado meets a volcano”, among other lyrics of poor quality.)

But perhaps it was always natural to expect the Eminems and Jay-Zs of the world to falter as they reached old age (in rapper’s years): their music was always about partying and the other well-trod-upon topics of the rapper. It’s not impossible to deliver a quality album as an older album: Q-Tip has put together two very good albums in his middle age, and it’s not surprising, in many ways. Q-Tip’s beats were always based more around jazz than most other rappers, and that somehow seems more appropriate, these days, for a middle-aged musician. It’s that laid-backedness that permeates his music: Q-Tip has that laid-back flow in which even a plea for two people to stay together sounds less impassioned than his just saying “Hey! It’d be a good idea!’ (source: “Won’t Trade” or “We Fight/We Love”) Which sounds a hell of a lot more dignified than threatening to burn your own house down (as Eminem does).

In most countries, the revelation that local governments would default on a fifth of their bank loans would be greeted with alarm. In China, however, the news came as a pleasant surprise.

“The fact that nearly 80 per cent of those projects have at least some capacity to service their debt is quite amazing,” said Qu Hongbin, chief China economist at HSBC.

Analysts said that their working assumption had been that a minimum of 30 per cent of the total Rmb7,700bn ($1,100bn, €875m, £732m) bank lending to Chinese local governments was unlikely to be repaid. That made the 20 per cent estimate relatively good news, even if it was only a preliminary figure provided by the banks themselves before a more formal assessment by the banking regulator this year.

Such a bleak outlook on local governments’ ability to service debt reflected the fact that many loans were handed out to projects that were never meant to make large profits.

Michael Pettis thinks that these figures are optimistic. Evan Osnos wonders whether China is in an age of complacency.

Great post in Ta-Nehisi Coates’s place about the history of immigration, by Sara Mayeux.

… climate-driven migration is a concept that's received a lot of attention in recent years. As the planet heats up, droughts spread, and sea levels rise, millions of people are going to be uprooted from their homes and farms and move elsewhere. According to a 2007 World Bank report, the vast bulk of this migration is expected to take place within developing countries, with people moving from rural villages to urban centers. One big concern here is that places like Lagos or Dhaka are already swelling exponentially, and their infrastructure can barely keep up, which is why so many "megacities" now sport massive slums.

But there's also likely to be a fair amount of migration between countries—and the consequences there are much harder to predict. As the rising oceans chomp away at Bangladesh, for instance, as many as 15 million people may have to abandon their towns and villages by mid-century. Partly in response, India has been constructing a 2,100-mile long fence to barricade itself against the predicted influx of climate refugees

A pair of good articles in the Los Angeles Times about health: this one about Accountable Care Organizations, this one about prostate cancer overtreatment. They’ve got a very good health section, I have to say.

The WSJ follows up with its pair of stories on the health care industry with an angle I’ve already covered: fewer doctor’s visits. There’s little of the doom-and-gloom that characterized my take on the matter, but I’m pretty comfortable with my take after reading the article.

The chances for reducing premiums?:

After the earnings releases, Rep. Pete Stark (D., Calif.) called on the companies to reduce their premiums since they are paying out less in medical care. In an interview, Aetna's chief financial officer Joseph Zubretsky said companies might eventually have to do just that. "If utilization stays down, it will have a favorable impact on rates," he said.

I love the “might just have to do it,” as if this were some concession granted to us from our corporate overlords rather than a rational response to business circumstances (as well as a welcome sign for the country’s economy.) And it’s worth wondering where, exactly, the decrease in utilization is coming from: fewer visits to, say, your plastic surgeon or fewer visits to your primary care doctor? (Both, you’d think, but to what degree?) A worrying excerpt here from the article:

One company reporting evidence of lower utilization is CVS Caremark Corp., the drugstore giant. In its earnings announcement Wednesday it said it is seeing a drop-off in new prescriptions for maintenance drugs tied to a decline in physician visits.

My understanding of maintenance drugs (note: I am very much not a doctor) would indicate that means fewer drugs like Lipitor, Zoloft, etc.—i.e. drugs meant to maintenance basic functions. This, I think we can agree, is bad. We want to cut costs, but not at the expense of, say, higher cholesterol.

There is one development the article covers that I’m not particularly enthusiastic about either: high-deductible plans. Here’s the portion:

More Americans also are buying high-deductible health plans that force them to bear more of the upfront costs for health services. Some 18 million Americans bought high-deductible plans this year, compared with 13 million last year, according to Paul Mango, a director at consulting firm McKinsey & Co.

At the beginning of the year, Dan and Natalie Johnson, of Gig Harbor, Wash., used the website eHealthInsurance.com to buy a new plan with a high deductible, now set at $5,500 for their family. Their previous coverage had no deductible.

Now, the couple says they are thinking twice before scheduling doctor visits. Recently, when their 16-year-old daughter's allergy prescription ran out, Ms. Johnson called the allergist's office to ask for a renewal, without coming in for an appointment, as she would have done under their previous insurance.

And this spring, their son, 14, got his athletic physical at a local urgent-care clinic that charged just $40, instead of a doctor's office, which would have cost about $90. "We don't want to go through our savings going to the doctor," says Ms. Johnson, a photographer.

Conservatives favor high-deductible plans because they believe in moral hazard: insurance, they think, leads us to overconsume health care—to schedule frivolous checkups, or what-have-you. Looking at the anecdote provided above, you can perhaps categorize the allergist check-up as slightly frivolous, if all the daughter needed was her prescription. But it is nice—particularly with a chronic condition like allergies—to have that doctor-patient relationship furthered and deepened, with a close monitoring of the condition achieved. In effect, high-deductible insurance in this instance has made the health care system less personal for the Johnsons’ daughter, which is bad.

The son’s example is similarly ambiguous. More care done in clinics is undoubtedly a good thing, since the space for care that’s important but not urgent is underserved. And certainly it’s a key point in the conservative case for high-deductible plans that people will start shopping around for a lower price, which seems to have happened here. Yet you can’t really apply this to the market as a whole: there simply isn’t that much price-transparency around in the health care market—it’s both hard to discover for the average consumer what any one procedure costs, and hard to aggregate that information to do comparisons. Furthermore, while you can approve of the idea of shopping around for a service like athletic physicals, note that it occurred at an urgent-care clinic. I’m guessing that to whatever degree the Johnsons’ son’s physical was urgent, it was not the kind of urgency the clinic is around for. And often these clinics are government-subsidized and located in underserved areas, which makes it impractical to suggest as a general solution (though perhaps a class of for-profit clinics will emerge.)

So while the tone is neutral, trust me: still not much of a reason to be encouraged by the direction of the health care industry.

You know what you want. Besides world peace, free money, and more Law and Order reruns. You want commentary on a pair of health insurer’s earnings reports. That’s why you’re reading this, as I aim to provide just that.

The pair of insurers is Aetna and WellPoint, just two nonfunctioning, grinding cogs in a generally nonfunctioning systems. Both, naturally, reported high profits: WellPoint’s profits went up 4% while Aetna’s profit went up: “The company Tuesday posted a 42% increase in second-quarter profit and raised its full-year outlook, even as revenue and employer-based membership declined.” Americans not receiving particularly good care is no barrier to high profits in our system.

What I found interesting about this report is the why. The Aetna article contains this somewhat vague paragraph: “Lighter utilization of medical services, including a less severe flu season earlier this year compared with 2009, and an upturn in the industry underwriting cycle are believed to be helping managed-care companies' results this year.”

Dig even closer into the numbers and you see some interesting things. Compare Aetna, here with WellPoint, next.

Aetna: “For the quarter, Aetna posted net income of $491 million, or $1.14 a share, compared with $346.6 million, or 77 cents a share, a year earlier. Revenue declined 1.4% to $8.55 billion.”

WellPoint: “Revenue at its commercial segment, the largest by revenue, fell 9% while profit jumped 28%. Consumer business revenue fell 2.4% and profit dropped 21%....Medical enrollment fell 2% to 33.5 million as of June 30 from a year earlier and declined 300,000 during the quarter. The company expects enrollment at the end of the year to be about 33.1 million.”

Basically, it looks like they made money the New York Times way: cutting costs faster than revenue fell. That revenue probably came from less coverage; we’re sure it did in the case of WellPoint, at least. And the lesser costs? There are two possibilities: people are voluntarily going to the doctor less or insurers are spiking claims. Either of these options is not particularly cheering, as you’d have to imagine people voluntarily skipping out for the doctor are for such things as checkups and preventative work, rather than, say, dismemberment; insurers spiking claims just creates hassles for everyone without improving either quality or the underlying issues of the health care system. So that’s bad. There would be at least a mild upside if, accompanied with these cuts in costs for the insurers, there were also cost-cuts for businesses and consumers, i.e. the insurers passed on their savings to consumers. As you may have guessed from the resolutely pessimistic direction of this paragraph, this is not the case (in WellPoint’s case, at least):

The company said it continues to price its commercial business so that the premium yield exceeds growth in total costs. While WellPoint maintained its forecast for group medical costs to grow by 8% plus or minus 50 basis points this year, it now expects the rate to hit the lower end of that range.

Basically, I’d assert there is literally nothing of a positive cast in these articles for the direction of the health care system specifically or our economy broadly. The worst aspect, I bet, is that they’re going to hoard that money because that’s what all the cool kids are doing. There’s nothing like a little bit of terrible news to propel you through your day with a smile. Go watch your Law and Order reruns.

The muni-debt bomb (as with everything in City Journal, must be taken somewhat skeptically due to its rabid libertarian bias, but I nevertheless think it makes several worthwhile points.)

So remember that Bell, California referendum that started that whole mess? Turns out the city was imitating the Chicagos and Texases of the world: one cop distributed absentee ballots and told the recipients how to vote.

Related: Scientific American on how we’ll deal with smart grids; the New York Times on utilities experimenting with new batteries. (Better batteries are perhaps the most important obstacle between us and a cleaner energy future.)

China, right now, is located uncomfortably on the value chain: it’s the workshop of the world for a lot of stuff, but it doesn’t make a lot of margin—I remember reading an article that something like $50 of a $500 iPhone is given to China as a part of its cut. Meanwhile, you have stories like this—Bangladesh moving in on low-wage garment manufacturing. However inconceivable it might seem to American spectators, who believe that China will own us all yesterday, China is a little bit squeezed right now.

That’s why I found these two WSJ stories today so very interesting. The first concerns a Chinese maker of GPS mounts who isn’t satisfied with the margin he’s making—so he decides to rebrand his mount to a sexier, more Western brand which he thinks will get more money: he calls it “Zuuma,” which, uh, sounds like the kind of name some branding consultant would come up with, perhaps after rejecting “Moova” or “Bon Voyager” or something like that.

The other story, a bit more in my health-care ambit, is about medical device manufacturers moving in on the very lucrative Chinese market:

That nation plans to spend $125 billion to build tens of thousands of hospitals and clinics, extending health care to nearly all of its citizens. Its ambitious three-year plan, announced last year, has created a rare feeding frenzy in the lucrative field of diagnostic-imaging machines, an area in which Western manufacturers still face little Chinese competition.

If form holds—recall that China is making moves on the airline industry—China will demand technological know-how in exchange for the market, which GE et. al. will gratefully accept, only to be edged out ~4 years from now by some scrappy Chinese upstart. This might be a really good thing for the U.S., by the by. At any rate, speaking of the U.S.—it’s really difficult to discuss China without discussing the U.S., and vice versa—I found this throwaway line to be worth a story in of itself:

Indeed, China's total medical device and equipment market is expected to roughly double between now and 2015 to $53.7 billion, according to market-research firm Frost & Sullivan. That figure includes products ranging from patient-monitoring devices to stents, but much of the growth will likely come from MRI and CT scanners, which are highly profitable and can cost up to $2 million apiece. And the likely sales come amid a protracted slump in the U.S. market for medical equipment and devices triggered by the economic slump.

There’s a protracted slump? Tell me more! Show me statistics! I’m intrigued! Can’t you tell from my exclamation points! Anyway, I’ll take the author seriously and assume it’s absolutely correct. If so, it’s a bit of a puzzler: I think a lot of people believe (including, rather immodestly, myself) that medical devices are a key driver in health care costs. And yet—as you may have noticed—health care costs continue to act as they have for a long while now. Which is why I called it a puzzler. There are a few possibilities, I think: a) doctors/hospitals are still raising costs in order to deal with the high fixed expenses of devices that they already bought (which, perhaps, they financed on the hope of better times in health care, and you can probably grasp the likely consequences of a recession here…) or b) medical devices aren’t really a key driver. At any rate, this is, ah, interesting, and I wish the author realized just how interesting little old me found it.

An interesting little story in the WSJ yesterday: investors are suing muni funds which tanked during the financial crisis for misrepresenting the safety of their product. It’s tough to tell how correct the decision is, but this report seems to indicate not so much:

Citigroup compared the funds' risk to other bond "alternatives" such as high-yield or emerging-market bonds. But another page labeled "risk vs. reward" indicated that the strategy was three times as risky as a bond-market index and even riskier than a stock-market index.

Without actually looking at the materials, it’s tough to say for certain—perhaps the “risk vs. reward” was like those prescription drug warnings, in small type and easily glossed over. Whether or not the actual decision was correct, I think this is the most interesting aspect of these funds:

In marketing materials prepared for brokers and investors in 2006, Citigroup indicated its funds could invest $8 for every $1 put into the fund by its investors by borrowing the additional $7. The funds could borrow at a short-term rate of 3.3%, with the proceeds invested at the rate of 4.2% paid by long-term bonds. The strategy could boost investor returns to 8.6%, the marketing materials indicated.

So the principal problem, it appears, was using short-term loans to pay for long-term bonds—they were basically counting, I’m guessing, on the free flow of liquidity to cover them in the interim. Obviously this didn’t quite work out, as we know.

This is yet another confirmation of the idea I’ve seen floating around—but hasn’t yet been seriously explored—that one of the big problems of the financial crisis was there was all this money out there looking for a safe haven (before the crisis hit), and there just wasn’t enough safety, so financial firms dressed up risk in safe-looking clothes, only to be hit hard when risk hit. If you take this view, then the logical conclusion is that this money should have been invested more wisely—more wisely than, say, let’s all buy a house!—and instead, perhaps on…infrastructure or something? Yes, that sounds like a great idea. Furthermore, if you take this view, don’t you have to believe that the current cash stockpiles of corporations could (through market magic) be reapplied to such worthy projects? Well, I do.

Monday, July 26, 2010

Some deficit spending is bipartisan…like, for example, recommending the F-35 continue to be built despite the Department of Defense’s belief that it is unnecessary for actual defense. (Actual deficit reduction will be achieved by cutting food stamps or something frivolous like that.)

This New Yorkarticle on Harlem’s politicians is well-done, but doesn’t have a ton of new info.

Between 1.4 million and 6.7 million Mexicans could migrate to the U.S. by 2080 as climate change reduces crop yields and agricultural production in Mexico, according to a study published online this week in the Proceedings of the National Academy of Sciences. The number could amount to 10% of the current population of Mexicans ages 15 to 65.

Guards and officials at a prison in northern Mexico let inmates out, lent them guns and allowed them to use official vehicles to carry out drug-related killings, including the massacre of 17 people, prosecutors claimed.

After carrying out the killings the inmates would return to their cells, the Attorney General's Office said in a revelation that was shocking even for a country wearied by years of drug violence and corruption.

In some of the 20 countries that conducted the tests, regulators figured that property values would keep rising or hold steady in a worst-case economic scenario….In other cases, unemployment rates in a double-dip recession crept up by as little as 0.1 percentage point from the tests' so-called benchmark scenario, which is based on current economic conditions.

In the contemporary entertainment business (and also, increasingly, in sports and in politics), it’s the business that’s the entertainment and the art of the deal that’s the art that draws most notice. We have become a society that is fixated on process and absorbed by the slippery, complex machinations of the middlemen, brokers and executives who conspire offstage to determine what takes place onstage. Call this outlook “procedural voyeurism” — a redirection of mass attention from the spectacle of the game itself to the circus of the game behind the game, as when Le¬Bron James, the N.B.A. superstar, commandeered the TV sets of umpteen thousands of sports bars, not to mention the better part of the Web’s bandwidth, to tell us, months before the season’s first tipoff, that he was moving from Cleveland to Miami to take advantage of the new team’s “cap space,” a slangy term for the ability teams have to add new strings of zeros to coveted players’ salaries.

I’d like to reemphasize the (sad) importance of process for the political media: all of the stories are about mechanics. Curiously—or, probably not, but from the perspective of informing the public—this process stories value people over the actual structure (which is how most people are unaware of how many votes it takes to break a filibuster, or even that such a thing exists.)

Mike Mandel has an intriguing memo—linked to here (ultimately a .pdf)—that covers what he considers the latest sector of the economy to be innovative: the communications sector. I think he makes a convincing argument as to the possibility, but I wanted to comment on a concept he articulates that’s a little bit more interesting than his putative main subject: countercyclical regulation. Countercyclical regulation, he says:

With unemployment stuck at just under 10 percent, federal policy makers would be wise to take a countercyclical approach to regulatory policy as well as ﬁscal policy. No serious economist wants to clamp down on public spending or raise taxes until the economy starts creating jobs at a more rapid clip. By the same token, there should be no rush to regulate sectors of the economy that are ﬁnally beginning to reweave the severed connections between innovation and new jobs.

Some of his examples, I think, are well put and demonstrate some of the wisdom of his approach: for example, the internet—it would be foolish to have imposed an internet sales tax in its infancy, as was being contemplated early in the internet boom of the 1990s. (He takes an odd swipe at net neutrality that I don’t feel qualified to answer; suffice it to say his example of differential pricing working well is the airline industry, which is a rhetorical error at the very least.)

But I think while his ideas are an interesting take on the idea of regulation, it’s trapped in mindset that regulation can only suppress economic activity, or jobs, and only represents a tightening. Some examples that contradict his idea: minimum wage (economists argue about whether there is much of a job effect; some studies I’ve seen reported say the minimum wage actually raises employment); various anti-anticompetitive, e.g. antitrust, regulations. Then there are examples of regulations that help spur new industries: for example regulations that require a certain amount of renewable energy would spur, not hinder, the green energy industry. Even the odd swipe of net neutrality can be explained in a pro-jobs way: does it seem likely that YouTube would’ve gotten ahead had internet providers been free to charge according to their own institutional priorities (which, note, aren’t just dollars-and-sense priorities: see, for example, the brouhaha about the political Super Bowl ads this year)? I’m going to guess not, though it’s just a guess. At any rate, I think there’s a pretty good case that governmental regulations can’t be stereotyped in the same old way, as I think Mandel is a bit guilty of in his memo.

Atul Gawande has a superb article on end-of-life issues in the most recent New Yorker that I urge you to read. It’s a complex article taking quality of care, cost, and philosophy in account for its argument, and has some very well-written sections about various patients with terminal diseases. I can’t really improve upon it, but I did want to comment about the ways our end-of-life care looks like the rest of our health care system, and the way it isn’t.

The first thing to account for is that I don’t necessarily believe end-of-life care is the biggest priority when it comes to reforming our health care system (i.e. lower cost for better results), but Gawande convincingly makes the case that it’s a fairly big priority, cost-wise:

The issue has become pressing, in recent years, for reasons of expense. The soaring cost of health care is the greatest threat to the country’s long-term solvency, and the terminally ill account for a lot of it. Twenty-five per cent of all Medicare spending is for the five per cent of patients who are in their final year of life, and most of that money goes for care in their last couple of months which is of little apparent benefit.

Spending on a disease like cancer tends to follow a particular pattern. There are high initial costs as the cancer is treated, and then, if all goes well, these costs taper off. Medical spending for a breast-cancer survivor, for instance, averaged an estimated fifty-four thousand dollars in 2003, the vast majority of it for the initial diagnostic testing, surgery, and, where necessary, radiation and chemotherapy. For a patient with a fatal version of the disease, though, the cost curve is U-shaped, rising again toward the end—to an average of sixty-three thousand dollars during the last six months of life with an incurable breast cancer. Our medical system is excellent at trying to stave off death with eight-thousand-dollar-a-month chemotherapy, three-thousand-dollar-a-day intensive care, five-thousand-dollar-an-hour surgery. But, ultimately, death comes, and no one is good at knowing when to stop.

As always in our health care system, you can get what you might call better results (debatably) for lesser costs (in this case, via hospice care):

Like many people, I had believed that hospice care hastens death, because patients forgo hospital treatments and are allowed high-dose narcotics to combat pain. But studies suggest otherwise. In one, researchers followed 4,493 Medicare patients with either terminal cancer or congestive heart failure. They found no difference in survival time between hospice and non-hospice patients with breast cancer, prostate cancer, and colon cancer. Curiously, hospice care seemed to extend survival for some patients; those with pancreatic cancer gained an average of three weeks, those with lung cancer gained six weeks, and those with congestive heart failure gained three months. The lesson seems almost Zen: you live longer only when you stop trying to live longer.

In this case, the benefits are considerably more debatable: you’re trading for the comforts of a better median-case scenario (a less painful, more manageable death) with the long-tail chance of a complete cure (Gawande writes that our health care system is excellent at dispensing lottery tickets.). Unlike much of the fixes our health care system, it’s not immediately obvious which part of the trade is better; indeed, unlike much of the fixes to our health care system, it’s unclear who would be pissed off by a chance to a hospice system. (Drug manufacturers, one might guess? Hospitals?)

No, what the problem is, according to Gawande, is our attitudes, ourselves. Gawande gives some credit to structural problems (doctors are paid to take the easy way out—say, prescribing chemo—but not to talk through potential therapies, or the lack of one, with patients that might result in a no-illusions, mutually-agreed-upon course of action.), but ultimately diagnoses the problem as being one of culture—the culture of doctors and patients. Doctors, he says, are prone to overestimating their patients’ livespans in terminal disease cases (he cites a study that claims 530%), which would lead them to overestimating the efficacy of care; patients, similarly, are prone to overestimating the effectiveness of care and just want to do something, anything. The latter element is a background problem for many hospitals; several doctors have found themselves buying the latest doodad (despite doubts about whether it would be effective or not), because patients have demanded that doctors have the newest technology available.

Ultimately, however, the latter problem is a background problem for most of the health care system. While end-of-life health care is an important issue to consider for families and the system alike, it’s (as you might expect) different than the rest of the system: whereas the rest of the system’s problems appear bound and enmeshed in itself, such that picking out just one element to change is a daunting exercise—all of the problems feed on one another—end-of-life care is apart, alone. To solve end-of-life care, you might just have to solve people’s fear of death, and I know of no bill or program that can conquer that problem.

Sunday, July 25, 2010

Disturbing headline from the NYT: “Industries Find Surging Profits in Deeper Cuts”, and here are the relevant grafs:

Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production. Harley, for example, has announced plans to cut 1,400 to 1,600 more jobs by the end of next year. That is on top of 2,000 job cuts last year — more than a fifth of its work force.

As companies this month report earnings for the second quarter, news of healthy profits has helped the stock market — the Standard & Poor’s 500-stock index is up 7 percent for July — but the source of those gains raises deep questions about the sustainability of the growth, as well as the fate of more than 14 million unemployed workers hoping to rejoin the work force as the economy recovers.

“Because of high unemployment, management is using its leverage to get more hours out of workers,” said Robert C. Pozen, a senior lecturer at Harvard Business School and the former president of Fidelity Investments. “What’s worrisome is that American business has gotten used to being a lot leaner, and it could take a while before they start hiring again.”

More on the Bell, California story: apparently the city manager is not only entitled to $700k in salary, but also $600k in pensions per year after retirement. Somehow I suspect the burghers of Bell, CA, did not realize what they were voting for in that special election…

The leak of the Afghanistan war logs to The Guardian and The New York Times by wikileaks is a must-read. I thought The Guardianhas the best coverage on it.

This is the action I wanted from the Obama administration on immigration:

The Immigration and Customs Enforcement agency expects to deport about 400,000 people this fiscal year, nearly 10 percent above the Bush administration's 2008 total and 25 percent more than were deported in 2007. The pace of company audits has roughly quadrupled since President George W. Bush's final year in office.

The rationale:

Partly designed to entice Republicans to support comprehensive immigration reform, the mission is proving difficult and politically perilous.

It’s almost as if they’re determined not to learn from their mistakes.

It would take $77.7 billion just to get the country’s public transit systems into shape, according to a report released last week by the Federal Transit Administration. By comparison, the report stated, the entire amount spent on rehabilitating and reinvesting in public transit nationwide in 2008 was $12 billion to $13 billion.

With luck, riders would not have to contemplate these numbers on a train ride like the June trip endured by about 900 people going from jobs in Washington to homes in Maryland. Just minutes after pulling out of Union Station, the train got stuck — and stayed stuck for more than two hours.

If only the federal government could somehow acquire such money and spend it to upgrade that transit, putting money in the pockets of various contractors (who would, in turn, spend it) and creating a durable benefit that future generations would enjoy. But, nay, this is impossible: it would turn a $1.1 trillion deficit to a $1.177 deficit. That’s irresponsible. For more practical effects of bowing to impossibility: New York set to end unlimited metro cards.

New York has its obligatory Mad Men coverage: asking whether Jon Hamm can become a headliner actor, and a profile of John Slattery.

Parts II and III of the Washington Post’s series on the national security state.

Felix Salmon tries to argue that there’s a silver lining to the, ah, relaxed stress tests of European banks, I find it dubious when I read exactly how relaxed it was:

Doubts about the severity of the stress tests imposed on 91 banks across Europe were raised after it emerged that banks had not been required to assume losses on some of their largest holdings of government debt despite the meltdown in the markets caused by May's sovereign debt crisis.

Data published by the Committee of European Banking Supervisors (CEBS) showed that the banks were only forced to simulate losses on sovereign debt that they held for trading purposes and not for bonds they might hold to maturity on their banking books.

I’d be shocked if banks didn’t take hits on their bonds. Clearly Greece, for one example, will restructure at some point.

Spoilers abound of the first episode of Season Four of Mad Men, and all lines in the show are paraphrased.

If Mad Men is occasionally over-obvious with its themes, it sometimes insinuates their ideas with a slip, a nudge—a wink (but not a leer, you sly dog you Don Draper). Let’s dispense with obviousness: Draper’s doing that stereotypical sixties thing—isn’t it funny he starts the episode out by saying Midwesterners find it impolite to talk about themselves and then ends it by agreeing that he, Don Draper, is the creative force behind the new Sterling Cooper Draper Pryce, the man whose whims founded the agency because he didn’t want to be bored.

As ever, Draper appears to be rather ambivalent about the matter: he delivers that assent to the backing of some propulsive rock song, but on the other hand he’d just been reproached by Peggy, who informed him—sarcastically—“Everything is about you. We’re all here for you.” As a rebuke to the wrong life philosophy you can’t do much better than that, but as the show’s driving force, Peggy might as well be telling the truth: everything is about Don Draper. Which makes the opening line of the show so apt: “Who are you?” It’d be belaboring the obvious at this point for watchers avid and novice to note that Draper doesn’t know himself and only has some clues.

Like, he wants to be an auteur of advertisement. The whole concept reeks of contradiction, or irony perhaps: we know that the art is in selling something a little bit dirty. Apparently Draper’s latest ad—an ad for some cleaner like Pinesol or some such—is quite the hit among the critics: it shows a little boy trapped in what seems to be a jail (with some fairly film noir touches to that jail; reminiscent also of Sin City), asking, plaintively—“Let me out of here!” etc.—until it’s revealed by the boy’s mother: “I can’t let footprints dirty my floor”—and we see the boy is in fact trapped under the table, the bars of the chair serving as jail door walls. Draper spends a scene admiring his own handiwork, the kind of narcissism artists will understand: the thrill of creation. At any rate, recriminations come quick about that interview he gave at the beginning of the episode (which redounded as negative because of Draper’s reticence, which the profiler interpreted as cockiness, resulting in a negative profile):

Roger Sterling (who really was at his wisecracking best in the episode): “Why didn’t you give him more?”

Draper: “I wanted to let my achievements speak for themselves.”

They never do, do they? Draper was expected to sell himself as well as product; sell himself to sell product, actually. I believe that’s what they call irony. So Draper wants to be an auteur but is trapped by demands: for money, by pushy clients, by pushy partners. He has another scene where, asked to come up with a campaign for a stodgy bikini maker (as the client informs Draper: a two-piece bathing suit), he deisgns a wink-but-not-a-leer campaign centered around the tagline: “So well-built, we don’t have to show you the second floor.” This doesn’t sit with the pair of, ah, family-oriented two-piece bathing suit makers, who reject the campaign, leading Draper to blow up with them and demand they change their business model to suit his creative needs: “You can either be safe and dead, or be risky and become rich.” Draper, of course, misunderstands his clients (they don’t want to become rich; it’s not the point), but perfectly aligns with his philosophy: Draper wants new, cutting-edge, creations out of nothing, and he inherently can’t get them because, well, he’s an ad man in an ad man’s universe. And that means he must sell and conform his desires to other people’s.

It’s here where the Don Draper girlfriend watch comes in. Don Draper’s dalliances are as much a problem for the series as there is: every time Don Draper scores easily, it’s a bit of a joke because life doesn’t work that easily, even for Don Draper; on the other hand, every time Don Draper has difficulty, it seems like a cheat, because, hell, he’s Don Draper. This is what we refer to as writing yourself into a corner, and unfortunately Mad Men hasn’t quite solved this problem. What it has solved, however, is coming up with interesting variations of the Don Draper type of woman: gorgeous and an idealist dreamer (exception being his Season Two fling with Bobbie). This one appears to be a bit of a bohemian—a small-time actress with the opera—and concerned with civil rights (she asks whether the death of a kid in Mississippi—clear from context she means a white kid, probably during the Mississippi Freedom Summer, though this is left unclear.) The Don Draper woman always wants something impractically futuristic, and is usually aware of her own naivete. This expresses the central dilemma of Don Draper, which is: how the hell do I get what I want (and just what is it I want anyway)? Draper’s life might look superficially different, but he’s the same old Draper inside. And that’s very satisfying.